Vodafone to challenge IT Dept’s tax demand in call centre case

Vodafone wins final approval for $1.6 billion deal to fully own Indian unit

New Delhi – UK-based telecom major Vodafone on Friday said it will challenge tax authorities’ order in a case related to sale of company’s call centre business, for which a demand of about Rs 3,700 crore was raised.

“Vodafone disagrees with the Dispute Resolution Panel decision relating to the transfer pricing order which Vodafone received in December 2011. Vodafone maintains that there is no tax payable on this transaction and the company will file an appeal before the tax appeal tribunal as soon as possible,” the company said in a statement.

The case relates to the transfer pricing order in connection with sale of call centre business to Hutchison Whampoa Properties India Ltd and the “assignment of call options” to Vodafone International Holdings BV (VIHBV).

The IT Department’s order was challenged by the British telecom giant on the ground that the disputed transactions were domestic in nature and did not fall within the jurisdiction of `transfer pricing’ norms.

The IT department had issued a tax assessment order in December 2011 asking Vodafone to add Rs 8,500 crore to its taxable income, thus raising the tax liability of the company.

“The facts of this case including the transaction structure ? were examined in considerable detail by India’s Supreme Court, which delivered an unambiguous judgement affirming that there is indeed no tax due. Vodafone will continue to strongly defend its position against this Order,” the statement added.

The telecom major is also facing a tax liability of over Rs 11,200 crore, along with interest, on its 2007 acquisition of Honk Kong-based Hutchison Whampoa’s stake in India’s telecom major, Hutchison Essar.